Crypto markets resume descent on global trade war concerns

Bitcoin price dipped on Thursday, dropping from $83,300 to $79,800. If BTC price declines, support can be found at $74,300, while resistance may be encountered at $84,600. 

Ethereum price also weakened on Thursday, dropping from 1,660 to $1,530. If the Ethereum price declines, it may encounter support near $1,400, while if it increases, it may encounter resistance near $1,830.

Most major cryptocurrencies are under pressure due to concerns that US President Donald Trump’s trade policies may start global trading wars. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, promoting a risk-averse sentiment that puts pressure on crypto markets. 

High taxes are likely to worsen the global economic outlook, promoting a risk-averse sentiment and putting pressure on cryptocurrencies. Last week, Trump announced a 10% tariff on all imports into the US, as well as an additional 25% tariff on all imported automobiles. On Wednesday, however, Trump announced that he will pause tariffs for 90 days, against all countries, except China. 

The situation between the US and China is continuously escalating, with both countries announcing heavier tariffs against each other every day. Trump announced last week 34% duties on imports from China, and China retaliated with 34% tariffs on US imports, causing the crisis to escalate. Trump further exacerbated matters on Monday by imposing additional 50% tariffs against China. China raised retaliatory tariffs on US goods to 84%, and on Thursday, the US increased tariffs on China to 14,5%, and China retaliated by increasing tariffs on US products to 125%. The potential of a trade war between China and the US is lowering the oil demand outlook, causing oil prices to plummet. 

Trump has announced the creation of a national Bitcoin reserve, stressing his determination to make the US the crypto capital of the world. The US government will cease selling Bitcoin and will stockpile it instead as a store of value. Reports that US President Donald Trump is preparing to launch a new stablecoin owned by his family boosted crypto markets this week.

Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates stifle economic growth, putting pressure on crypto markets. The US Federal Reserve kept interest rates unchanged at its policy meeting in March. FOMC policymakers voted unanimously to maintain the federal funds rate to a target range of 4.25% to 4.50%. Markets are pricing in two more rate cuts this year, with the first rate cut in June, while a third rate cut is also considered possible.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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